Make better decisions – the negligence of alternatives

You and only you are responsible for your life choices and decisions – Robert T. Kiyosaki

Summary:

• The negligence of alternatives leads to unfavorable decisions
• We usually forget to think about alternatives to the option under discussion
• Most often, the optimal decision lies in-between the most obvious options

Practical advice:

• From now on, you should tell yourself that there’s much more than the status quo and 1 option
• Ask yourself what are the implicit assumptions limiting your ideation and decision-making
• Let your friends, colleagues, or family be your thought partner

Dear friend,

During my vacation last week, I read a book about “acting smarter”, i.e. how to prevent errors in reasoning to make better decisions. Usually, when I look for a new book, I search for content that helps me to improve a particular area of my life (career, health, relationships, etc.). In this case, though, I had no real expectation towards to book and read it rather for my own entertainment because I wanted to fully focus on the time off.

To my surprise, the book offered multiple new concepts I’d never thought about before. One of them in particular still makes me wonder how many times I fell into this “cognitive trap”. The author calls it “alternative blindness”, i.e. comparing an alternative with the status quo instead of the other possible alternatives.

In today’s blog article, I will explain this cognitive trap in more detail, tell you why it’s actually so bad, and give you practical advice on how to prevent this cognitive trap.

The negligence of alternatives

Imagine you contemplate whether you should go to university again in order to pursue an MBA. Most people, including me, would think about this decision the following way: It’s either the MBA or not doing the MBA, i.e. we compare the pros and cons of the MBA relative to the status quo.

Another example: Imagine you have this genius business idea and think about starting your own company. In order to evaluate this opportunity, you compare the pros and cons of starting your own company with your current situation (status quo).

That might be intuitively right, however, from a rational perspective, it’s rather wrong. A good decision-maker would think about other possible options. For example, an MBA takes 2 years to complete, costs a 6-digit amount of money, and requires you to stop working full-time. With these “resources” plenty of other options are feasible. Imagine you take the $150,000 and invest it into 3 startups, contribute your knowledge, and take these lessons learned for your later career. Or you invest the $150,000 in your own business. Or just take some selected university courses for 6 months and go back to work. And there are plenty more options.

Particularly politicians are faced with this cognitive error as they often need to decide whether something new is going to be built or not. Should we build the new hospital? Should we build the new school? The new stadium? New play garden? It’s most often status quo versus something new and not “what could we do best with the money, land, and other resources?”.

Why this cognitive error is so bad

This negligence of alternatives leads to unfavorable decisions because the optimal option and hence decision is usually a mixture of both alternatives. If we go back to the example of starting our own company, the best way might be that we don’t quit our job immediately but start slowly, work at the weekend, ask for a reduction in working hours, and work full-time on our new ventures when we could prove that (A) we have the discipline and stamina to work as our own boss and (B) our product/service is actually something the market wants.

Moreover, we forget to think about alternatives to our options. Maybe it’s not our own company that works best for us but working for a startup. Maybe it’s not an MBA we should pursue but a PhD.

For example, many students who graduate with their Bachelor’s and want to pursue a Master’s see only 2 options: Either a gap year filled with multiple internships or directly continuing to study. However, there are so many more options: Working full-time for a year, starting earlier with the Master’s, prolonging the gap year for another year, starting with the Master’s and doing a gap year in-between, etc. Because of the negligence of alternatives, we fail to grasp so many great opportunities.

How to avoid the negligence of alternatives

First, you have to stop imposing bans on your thinking. From now on, you should tell yourself that there’s much more than the status quo and 1 option. On the one hand, there are many options in-between. On the other hand, there might be even more alternative options available.

Second, make the restrictions on your thinking visible. Ask yourself what are the implicit assumptions limiting your ideation and decision-making? Can you really just do an MBA? Can’t you use the time, money, and energy alternatively?

Third, let your friends, colleagues, or family be your thought partner. I often ask other people what they think about my endeavors, what they would do in my situation, and whether they see alternative options. That’s much more about obtaining a new perspective than about the actual outcome.